Ethereum will make the consensus change as early as September. The platform will migrate from an algorithm of Proof-of-Work (PoW) to an algorithm Proof-of-Stake (PoS). This migration is not unanimous among users, they fear the possibility of censorship at the protocol level. Indeed, with this transition, blacklisted addresses will no longer be able to carry out transactions. This rule will be valid even if the operations are done using smart contracts.
Ethereum migration raises serious concerns among users
Thanks to its The Merge update, the Ethereum blockchain intends to change its consensus protocol. Since December 2020, the platform has launched a new blockchain named beacon chain. Its goal is simple, to establish a consensus Proof-of-Stake. With the update scheduled for September, the platform will want to bind the application layer of Ethereum to the consensus layer in proof of stake. Blocks created by transactions on the blockchain will now be trusted by the beacon chain in PoS.
Ethereum’s decision to migrate from Proof-of-Work (PoW) at Proof-of-Stake (PoS) is causing concern among users, as the threat of protocol-level censorship looms. A reaction justified by the recent sanctions of the American government against the Tornado Cash source software. For Delphi Digital General Counsel Gabriel Shapiro, expect enormous pressure from Ethereum validators for protocol-level censorship to apply. In fact, this measure would allow them to work legally in order to avoid sanctions.
An update that continues to divide the crypto community
Opinions on the transition undertaken by Ethereum continue to differ. Despite the regulatory pressure put forward by the platform to justify this transition, some experts remain skeptical. They highlight the challenges with proof of stake to remain anonymous when wrapping a number of on-chain consensus-compliant transactions. Because PoS necessarily requires the staking assets on the chain.
On the other hand, a large proportion of users believe that once the migration is complete, the Ethereum network will be better equipped to resist censorship attacks by governments. The likelihood of an attack of this nature targeting Bitcoin or Ethereum remains low. However, proof-of-work chains have two big drawbacks: their complexity and their physical presence. Flats that give a little more credibility to the assets of the proof of stake. In addition, it is important to emphasize that the material used for the deployment of PoS is not energy-intensive.
Ultimately, The Merge will be live in a few weeks, but concerns around the migration remain. Justin Bons, the founder and CIO of Cybercapital, wants to put the concerns of users into perspective. According to him, cryptocurrency platforms should not fear government regulators. He advises : “a reasonable middle ground must be found that preserves the credible neutrality of blockchains, ensuring individual privacy and corporate compliance“. Be that as it may, the Tornado Cash case law adds a layer to the doubts surrounding the confidentiality of transactions.
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